Tokyo (AFP) – Japan is set to offer India a carbon offset scheme that would see Tokyo’s environmental technology used by the rising Asian giant to help reduce its emissions, a report said.

The scheme would see Japanese firms earn carbon credits in return for helping developing countries reduce their greenhouse gas emissions, the Nikkei newspaper said in its Monday evening edition, adding India was a likely early partner.

The joint crediting mechanism (JCM) would encourage Japanese firms to participate by allowing them to promote technologies such as energy-efficient furnaces and air-conditioning systems, in developing countries with huge market potential such as India.

The Nikkei report comes as Japan struggles to further cut its greenhouse gas emissions, with businesses claiming many factories, vehicles and household appliances are already fitted with energy-efficient technologies.

It also comes as the latest energy white paper showed Japan is increasingly dependent on imported fossil fuels for power generation, with the public still unwilling to allow nuclear reactors to be switched back after the huge 2011 quake-tsunami disaster that crippled the Fukushima nuclear plant.

Under the mooted joint crediting mechanism (JCM), participating firms would be allowed to count the carbon credits as reductions in their own greenhouse gas emissions or could sell them to the government, the Nikkei said.

Japanese Prime Minister Shinzo Abe and his Indian counterpart Narendra Modi, who will visit Tokyo next month, will agree to speed up talks on the matter, the newspaper reported.

Japan has already signed JCM agreements with 11 developing countries, including Indonesia, Mongolia and Kenya.

Tokyo hopes carbon credits from the scheme could be used to come closer to its target of reducing Japan’s greenhouse gas emissions by 3.8 percent against the 2005 level.

Japan, which had relied on nuclear for over a quarter of its power, jacked up imports of fossil fuels to keep the lights on after the quake-tsunami disaster forced a shutdown of the country’s reactors.

About 88 percent of Japan’s energy came from fossil fuels in the past fiscal year to March, according to the white paper released Tuesday.

President Barack Obama will unveil a plan on Monday that will cut carbon pollution from power plants and promote cap-and-trade, undertaking the most significant action on climate change in American history.

The proposed regulations Obama will launch at the White House on Monday could cut carbon pollution by as much as 25% from about 1,600 power plants in operation today, according to those claiming familiarity with the plan.

Power plants are the country’s single biggest source of carbon pollution – responsible for up to 40% of the country’s emissions.

President Obama told West Point graduates this week that the US must lead by example on climate change. Photograph: Jim Watson/AFP/Getty

The rules, which were drafted by the Environmental Protection Agency and are under review by the White House, are expected to do more than Obama, or any other president, has done so far to reduce the carbon dioxide emissions responsible for climate change.

They will put America on course to meet its international climate goal, and put US diplomats in a better position to leverage climate commitments from big polluters such as China and India, Obama said in a speech to West Point graduates this week.

“I intend to make sure America is out front in a global framework to preserve our planet,” he said. “American influence is always stronger when we lead by example. We can not exempt ourselves from the rules that apply to everyone else.”

It won’t be without a fight. Obama went on in his remarks at West Point to take a shot at Republicans who deny climate change is occurring, and the White House press secretary, Jay Carney, on Thursday accused critics of making “doomsday claims” about the costs of cutting carbon.

But the White House still showed some signs of nervousness about a political backlash, releasing a report about expanded oil and gas production on Obama’s watch and adding to the furious spinning by environmental and industry groups about the potential costs and benefits of the EPA regulations.

“We actually see this … as the Super Bowl of climate politics,” said Peter Altman, director of the climate and clean air campaign for the Natural Resources Defense Council, which produced a model carbon-cutting plan that has helped guide the EPA regulations.

But if all unfolds according to plan, Obama will have succeeded in overcoming blanket opposition – and outright climate denial in many cases – from Republicans and some Democrats in Congress, an industry-funded misinformation campaign, and a slew of anticipated lawsuits.

Obama had originally hoped to cut carbon pollution by moving a bill through Congress. Four years after that effort fell apart, campaigners say the EPA rules could deliver significant emissions cuts – near the 17% Obama proposed at the Copenhagen climate summit – and the cap-and-trade programmes that were so reviled by Republicans.

The EPA, using its authority under the Clean Air Act, proposed the first rule phase, covering future power plants, last September.

In this the more politically contentious phase of the plan, it is widely believed the EPA will depart from the “inside the fence-line” convention of earlier environmental regulations for mercury and other pollutants, which focused on emissions-scrubbing on specific power plants.

The EPA administrator, Gina McCarthy, is seeking steep reductions – as much as 25% – but she has hinted repeatedly that she will allow states latitude in how they reach those targets.

The plan would allow electricity companies to reduce pollution by shutting down the oldest and most polluting coal plants. They can install carbon-sucking retrofits. They can expand wind and solar energy, upgrade the electrical grid, encourage customers to update to more efficient heating and cooling systems, or more efficient appliances and lightbulbs.

“They have recognised huge emissions reductions opportunities are often cheaper than trying to do it all inside the plant,” said David Doniger, who heads the climate programme at the NRDC. “If you want to get substantial reductions and you want to get it economically, you have to take into account a system-wide approach.”

The EPA to expected to try to soften the impact of the regulations by coming out with a range of targets, taking account of the energy mix in different states, and by allowing a two-step phase-in of the targets, with steeper cuts delayed until 2030.

But campaigners and industry are bracing for a fight.

The Chamber of Commerce, one of the major opponents of the environmental regulations, said in a report on Wednesday the EPA regulations would cost $51bn a year in higher electricity prices and lost jobs and investment – but those figures were disputed.

Coal mining companies, power plant operators that are heavily dependent on coal, attorney generals in about a dozen Republican-controlled states, and conservative think tanks also argue the system-wide approach oversteps the EPA’s authority, and are lining up for legal challenges.

“I suspect we will see more environmental litigation as it relates to CO2 emissions going forward from a variety of sources,” said Karen Harbert, who heads the Chamber’s energy institute.

America’s carbon dioxide emissions have been falling over the last few years to the lowest levels since the 1990s, because of a switch from coal to cheaper natural gas, and on a smaller scale increased investment in renewables. The economic downturn also reduced demand for electricity.

The White House said those changes – which were mainly market-driven – showed the EPA regulations would not hurt the economy as critics claim.

“We can transform our energy system to be less carbon intensive while still growing the economy,” Obama’s counsellor, John Podesta, told a conference call.

The EPA rules would fix those reductions in place and – as several campaigners and energy analysts noted – be a relatively easy reach for a large number of states which have already moved to cut emissions and expand wind and solar power.

More than 30 states already have regulations promoting renewable energy. Minnesota and Colorado are pledged to get 30% of their power from renewables by 2020.

Meanwhile, nine north-eastern states and California are already rewarding power companies which cut carbon through operating cap-and-trade systems.

Those changes in the energy landscape – and an intense outreach campaign by McCarthy and other officials – could defuse of the opposition, said Paul Bledsoe, an energy consultant who served on Bill Clinton’s climate change task force. “I think there is a divide between the companies,” he said. “Coal heavy companies are going to fight it tooth and nail, especially behind the scenes, legally. The more gas, nuclear and renewable-heavy companies are going to be more sanguine about it.”

The EPA rules could also end up vastly expanding regional cap-and-trade programmes. Kelly Speakes-Backman, who heads the Regional Greenhouse Gas Initiative in the north-east, said she had already had quiet approaches from a number of state officials.

She said the nine states in RGGI had already cut carbon dioxide emissions 40% from 2005 levels, and were aiming to halve carbon pollution by 2020. The new EPA rules would be a “game-changer” for cap-and-trade.

Once Obama makes his announcement on Monday, the clock starts ticking. The EPA will have one year to take public comment from anyone from Greenpeace to Peabody Coal before finalising the new standards in June 2015.

Once those rules are final, the states will have one year, or until June 2016, to submit their plans for meeting the new EPA targets.

With Obama’s term ending in January 2017, those are tight deadlines – especially with the legal and political battles ahead. But it does put Obama in position to fulfill the promises he made on climate change when he was first elected in 2008.

“This whole suite of policies is getting us within shooting range of where we could have been with a cap-and-trade bill,” said Vicki Arroyo, who heads the climate centre at Georgetown University law school. “If the EPA is really restructuring programmes to take advantage of systems wide benefits … then that is just huge.”